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The US authorities not too long ago permitted a 24-month tariff exemption for photo voltaic panels from 4 Southeast Asian international locations: Vietnam, Cambodia, Malaysia, and Thailand to satisfy nationwide renewable electrical energy demand. Vietnam Briefing appears to be like on the alternatives and the way Vietnam’s photo voltaic panel manufacturing is prone to profit in the long run.
On June 6, 2022, the US introduced a tariff exemption for photo voltaic panels from Vietnam together with Cambodia, Malaysia, and Thailand for as much as 24 months to satisfy the skyrocketing photo voltaic power demand within the US.
The transition to renewable power is a precedence for the US because it strives to rework its economic system right into a sustainable and inexperienced economic system. Nevertheless, the scarcity of home manufacturing capability has led the US to mass import photo voltaic panels from Vietnam – a trusted associate in commerce.
Whereas consultants had anticipated that additional tariff enlargement on Asian international locations can be the case after the US introduced an prolonged tariff for China’s photo voltaic panels in 2011, the exemption of tariff for the 4 Southeast Asian international locations was not anticipated.
Right here, we study the present state of affairs of photo voltaic panel manufacturing in Vietnam and the way it can serve the US electrical energy market.
Vietnam’s photo voltaic panel manufacturing trade
The photo voltaic panel manufacturing trade in Vietnam is rising for each international and home corporations specializing in manufacturing photovoltaic cells and modules. The competitors is very fierce, on condition that there are largely foreign-owned firms, together with China and the US, with just one Vietnamese agency.
First Photo voltaic is a US-based agency and the main performer of photo voltaic panel manufacturing in Vietnam, with an annual manufacturing capability of as much as 2.7 GW, far exceeding all different gamers. First Photo voltaic is dedicated to a long-term partnership with the Vietnamese trade, because it has invested a complete capital funding of US$830 million out of the US$1.2 billion dedicated capital funding.
Nearly all of different corporations are both owned or invested by outstanding Chinese language conglomerates. That’s, each Trina Photo voltaic Vietnam and JA Photo voltaic obtain 100% funding from China’s TrinaSolar group and JA Photo voltaic group, respectively. The 2 corporations mixed presently make up a big portion of Vietnam’s photo voltaic panel provide.
The one Vietnamese agency within the trade, IREX is a subsidiary of SolarBK. That is the one native agency identified to fabricate photo voltaic panels, with a market share of simply 1 p.c.
Vietnam is slowly positioning itself on the worldwide market as a number one exporter of photo voltaic panels, exporting to 50+ international locations worldwide and making up a substantial share of the world’s electrical energy provide pie. Vietnam’s present export of photo voltaic panels as of 2020 is as follows:
Nation | Export Worth (in US$) |
---|---|
US | 3.4 billion |
Canada | 91 million |
The EU | 57.8 million |
Turkey | 19.5 million |
The UK | 17.2 million |
Japan | 15.6 million |
Australia | 1.5 million |
US electrical energy consumption and provide
Electrical energy consumption within the US has been at an all-time excessive for the previous a number of years, starting from 3,800 to 4000 terawatt-hours.
The US’ electrical energy wants has been met by a mixture of various sources, together with coal, pure fuel, renewable sources, and nuclear energy. The market share of the sources will be seen within the under infographic.
Pure fuel nonetheless boasts the primary place because the main generator of electrical energy within the US, claiming 40 p.c, whereas renewables, coal, and nuclear energy share comparatively equal proportions at 21 p.c, 19 p.c, and 20 p.c respectively.
It may be assumed that renewable power utilization within the US is on the rise, up 9 p.c in comparison with 2019, and projected to say an additional 10 p.c by 2025, overtaking pure fuel because the dominant supply of electrical energy.
The sample has indicated an immense potential for photo voltaic panel export to the US because the nation shifts its focus to renewable power.
Tariff exemption for Vietnam’s photo voltaic panels: What does it imply for companies?
Vietnam has been a outstanding exporter of photo voltaic panels to the US for the previous couple of years, claiming over US$3.4 billion in export worth within the trade as of 2020. Right this moment, the US is the largest export marketplace for Vietnam whereas the latter is the previous’s 10th provider of import items. The highest Vietnam export class is electrical equipment, producing US$27 billion in 2020 and US$ 36 billion in 2021, which incorporates the export of photovoltaic panels.
Information exhibits that in Q3 2021, photo voltaic panel module imports of the US fell sharply by 27 in comparison with Q2, because of the penalties of US tariffs on photo voltaic panels from China.
A drastic fall in photovoltaic panel imports on account of tariff enlargement in parallel with post-pandemic provide chain disruption and difficulties in international delivery has left the US deficit in photo voltaic cell provide, which has been leveraged as a name for emergency measures by US President Joe Biden who invoked the Protection Manufacturing Act after complaints from trade teams of provide chain points hampering the photo voltaic panel trade.
The tariff exemption for photo voltaic panels from Vietnam and three different Southeast Asian international locations comes as an excellent push for photo voltaic producers in these international locations and can assist ramp up manufacturing to satisfy home photo voltaic panel manufacturing demand.
The exemption signifies the promising prospects of investing in manufacturing photo voltaic panels in Vietnam. Vietnam presents immeasurable alternatives for growing photovoltaic manufacturing, with an growing variety of financial zones and industrial parks on the rise, making Vietnam a lovely China+1 vacation spot. In the meantime, the US tariff exemption of the commodity means companies within the trade are sure to multiply their earnings whereas the prices stay unchanged.
Nevertheless, the Vietnam Commerce Treatments Authority suggested companies to remain cautious relating to the anti-circumvention investigation by the US. It’s reported that the US continues to be conducting additional investigation into whether or not the 4 Southeast Asian nations are practising circumvention on anti-dumping and tariff-countervailing on photo voltaic panels from China.
Though there has but to be any official assertion from the US on the difficulty, it’s advisable for buyers and producers to reap the benefits of the 24-month tariff exemption to raise their enterprise whereas trying to diversify their markets to keep away from dependence on the US.
Additional, companies ought to guarantee their merchandise adjust to guidelines or origin tips to be eligible for exports to the US. That’s, the manufacturing of photo voltaic panel elements and modules have to be manufactured in Vietnam to make sure the origin of the completed merchandise.
Tax exemption expiration: What to anticipate?
Following the subsequent 24 months, the priority is on whether or not the US will elevate the exemption. Consultants have held the view that ought to the home photo voltaic panel trade within the US fail to scale up, both tariff exemption or lowered tariff could also be carried out to satisfy the nation’s renewable power demand.
Nevertheless, as the way forward for renewable power is promising and international locations are uniformly shifting their focus to a inexperienced and sustainable economic system, the demand for photo voltaic panels is prone to stay intact in the long run. Ought to the US now not present tariff assist, buyers might search to diversify their markets on account of rising demand. As of now, Vietnam is exporting photo voltaic panels to properly over 50 international locations, and this checklist is prone to develop.
For additional insights on how you can enter the photo voltaic panel market or actively handle the present operation for better effectivity, buyers can contact our consultants for an in-depth dialogue.
About Us
Vietnam Briefing is produced by Dezan Shira & Associates. The agency assists international buyers all through Asia from workplaces the world over, together with in Hanoi, Ho Chi Minh Metropolis, and Da Nang. Readers might write to vietnam@dezshira.com for extra assist on doing enterprise in Vietnam.
We additionally preserve workplaces or have alliance companions helping international buyers in Indonesia, India, Singapore, The Philippines, Malaysia, Thailand, Italy, Germany, and the United States, along with practices in Bangladesh and Russia.
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